Tax Advice for Body Shop Consultants

Being your own boss as a Body Shop Consultant means you need to be self-employed.  

If self-employment is new to you, it can be difficult to know where to start and what it all means.

Here I show you how to get started as self-employed, unravel some of the confusion around taxes and get you prepped for doing your first tax return.

What is Self-Employment?

Self-employment means that you work for yourself rather than for someone else. This means you:

  • Are responsible for finding your own work, Body Shop are not obligated to guarantee you with products and income;
  • Come up with ideas to make your own sales;
  • Need to have your own methods to collect payments from your customers;
  • Will not receive sick pay or holiday pay, so you will go without earnings during these times;
  • Need to register as self-employed, work out your own taxes and send a tax return to HMRC.

Being self-employed doesn’t restrict you to just working as a Body Shop Consultant. Or if you wanted you could take an employed job somewhere and work as a Body Shop Consultant on the side.

When Should You Register as a Self-Employed Body Shop Consultant

You’ll need to register as self-employed if you earn more than £1,000 in untaxed income during a tax year.

A tax year runs from 6 April to 5 April.

If you earn less than £1,000 from Body Shop then you may be able to take advantage of the HMRC Trading Allowance. This means you avoid needing to register as self-employed and sending in a self-assessment tax return.

If you earn more than £1,000 from Body Shop or you intend to build up your own business, then you should register as self-employed.

You need to register by the 5th October of the second tax year you started working for yourself.

So if you became a self-employed Body Shop Consultant on 15 October 2018 you’ll need to register with HMRC by 5 October 2019.

You can register as self-employed online, it’s easy to do yourself. And I’ve put together a video to help you.

How to Register as Self-Employed

What Taxes Do Self-Employed Body Shop Consultants Pay

You will need to pay Income Tax and 2 types of National Insurance (Class 2 and Class 4) on your Body Shop Earnings.

Earnings mean all your Body Shop Sales income less your body shop expenses.

There is often a misunderstanding amongst self-employed Body Shop Consultants that their earnings are tax-free so they can work without any tax obligations.  This is not true.

Body Shop Consultants must register with HMRC and declare all their earnings.

Earnings may be tax-free because you earn below the personal allowance.

However, you still need to declare everything to HMRC using a self-assessment tax return.

What Are Expenses

One of the perks of being self-employed is that you get to set off costs against your income.  This reduces the amount of tax you have to pay.

There are rules set out by HMRC which expenses you can claim for (allowable expenses) and those you can’t (disallowable expenses).

Allowable Expenses for Self-Employed Body Shop Consultants

Almost everything you pay for in relation to working as a Body Shop Consultant will count as an allowable expense and reduce your tax bill.

This includes things like:

  • Body Shop commissions and fees;
  • Stock;
  • A portion of your household bills if you work from home;
  • Marketing;
  • Insurance;
  • Mobile phone and data;
  • Travel;
  • Mileage;
  • Card fees if you offer card payments to your clients;
  • Accountants fees;
  • Bank charges for a business bank account.

There may be expenses you pay for that you use personally, like your mobile phone. In these cases, you can only claim a portion as an allowable expense.

So if you use your mobile phone for 60% work and 40% personal, then you take 60% of the total costs to put against your taxes.

Disallowable Expenses

After years of people pushing the boundaries and claiming for some questionable expenses, HMRC have a growing list of expenses that are disallowable.

This includes things like:

  • Fines and penalties;
  • HMRC penalties and interest;
  • Personal clothing;
  • Lunch, except in special circumstances;

Tax Allowances and Tax Relief for Self-Employed Body Shop Consultants

In addition to expenses, there are certain allowances and reliefs available to help self-employed business owners reduce their tax bills.

Here are some of the common allowances and reliefs available:

Read More: How to Reduce Your Tax Bill When You’re Self-Employed

Self-Assessment Tax Return

You need to declare all your earnings from your Body Shop business, as well as any other forms of income you have on a self-assessment tax return.

This is the official form required by HMRC and it’s due by 31 January each year.  The penalties for missing this deadline start at £100.

A self-assessment tax return contains:

  • Your personal details;
  • A summary of all your income not just as from your Body Shop Business (like bank interest, employment income and rental income);
  • Details of allowable expenses you wish to claim against your taxes;
  • A tax calculation;
  • How much tax you need to pay.

One tax return form covers one tax year.

So a tax return for 2018/2019 covers earnings from 6 April 2018 to 5 April 2019 and needs to be filed by 31 January 2020.

When is Your Tax Due?

Any tax you need to pay is due by 31 January each year.

Payments on Account

In addition to your tax payment, you may need to make a contribution of 50% towards your next year tax bill.  This is called a payment on account and can come as a shock to some self-employed people.

Bookkeeping and Record-Keeping for Self-Employed Body Shop Consultants

One of the keys to reducing your tax bill is to stay on top of your bookkeeping and tacking all your expenses.

You’ll also need to make sure you keep all your receipts support all the expenses you want to claim, as well as details of what you have been paid.

The simplest way to do this is to:

  1. Open up a separate bank account for yourself and set this to send/receive any payments. That way when tax time comes you has a record of everything that has happened.  
  2. Save all your receipts and reports using a bookkeeping app.

Quickbooks is a great option for self-employed Body Shop Consultants as you can photograph and store your expenses on the go, as well as generating the figures you need to fill out your self-assessment tax return.

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Updated 4 April 2019

Anita Forrest
About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - a UK small business finance blog where she shares help and advice with the self-employed community to make topics like registering a business, bookkeeping and taxes easy to understand.